Loyalty

Loyalty. It's the Holy Grail of business. Organizations want customers who will choose their brand even when competitors are easier to find, are cheaper, offer better benefits or are new and shiny. In the best of scenarios, they want advocates who will come to their defense in bad times, and sing their praises at all times.

You know this. The key questions are: How do you achieve it? How do you foster this level of dedication and commitment? At Olson 1to1, we approach every consumer challenge from the same starting place: with people in their everyday lives. This approach is unique because it’s grounded in human relationships and produces more emotional and authentic loyalty, which we’ve found is longer-lasting and more profitable. We call this approach Olson Brand Anthropology®.

Brands win when they enhance and facilitate the relationships that matter to their customers—when they make their everyday lives easier, more enjoyable or richer. In this respect, brand loyalty is entangled with interpersonal loyalty.

How Loyalty Forms

Loyalty manifests in varying ways across multiple kinds of human relationships: parent/child, spousal relationships, voluntary organizations (military, sports teams, sororities), friendships, cultural groups and so on. While loyalty looks different in each case and across the globe, the process underlying its formation remains constant. In every case, there are six stages to loyalty. The first three set up the conversion from non-loyal to loyal, stage four is the pivot point that signals commitment, and the final two stages enrich and intensify the connection. Following these same stages, brands and organizations can inspire loyalty and affiliation.

But let’s begin with a definition. Following our principle of “people first,” we take our definition of loyalty from kinship studies: the subfield of anthropology that studies how and why we form lasting relationships. Within this realm, loyalty is understood as enduring solidarity premised on fulfillment of a code of conduct1.

In a nutshell, loyalty is the outcome of our willingness to interact in certain ways. As noted, the specifics of those behaviors vary based on the relationship, but the stages of the process that underpin loyalty are consistent. Let’s look at these stages and give interpersonal and brand examples for each.

Stage 1: Create, Identify and/or Build Upon a Shared Experience

All communities are grounded in a shared experience of some sort. In most naturally occurring groups—think of traditional cultures around the globe—this shared experience comes from how you are raised, what you learn to eat, the clothes you wear and so forth. For chosen communities, such as fraternal, military or religious organizations, the shared experience is often an initiation. Boot Camp is a classic example: those joining the armed services all endure rigorous training designed to foster a cohesive group ethos. The structure and language of the rituals emphasize camaraderie and impose activities that bond the initiates together through physical and/or emotional challenges.

Your brand can certainly play in this arena by finding a space within these experiences, thus linking your brand to existing communities. Hotels can touch on the discomfort that travelers experience when arriving at an unfamiliar destination; diaper brands can touch on the worries that new parents feel; accessory brands can touch on the drive to be noticed among fashionistas; and electronics brands can touch on the need technophiles have to be in the know.

The more important challenge for brands is identifying a shared experience when people don’t know they share one. For example, our agency’s work for the Belize Tourism Board speaks to those who travel for adventure2. While a distinct mindset, the work itself creates a rally point and communal ethos around the mindset. Understanding these experiences and why they are important to different communities is the first step in building a relationship.

Stage 2: Demonstrate Empathy

Once you know what matters to people, let them know you understand and value it. This is empathy. And when people feel validated, more often than not, they are willing to stay around and engage with you. Making no move to understand their lives will result in two consequences. First, your customers will see your lack of empathy as dismissive or rude. Second, you run the risk of being irrelevant because you don’t listen and don’t understand what they need or want.

This is a key stage for brands and one where so much marketing falls short. Brands demonstrate empathy when they understand their customers’ lives: their frustrations, fears, joys, sense of humor and hopes. Your messaging, your communications strategy and your product benefits must resonate with what matters to your customers, not with what matters to you as a brand. For Best Buy, this resonance lay in allowing it's best customers to get first access to the latest gadgets and technology3. For Sun Country Airlines, it was understanding that a traditional points accumulation program had less utility for casual, low-frequency travelers—resulting in the innovation to pool points among family and friends, an industry first4. Again, in both cases, the challenge was to discern what was relevant and what took priority using a mix of qualitative and quantitative insights. Identifying these and signaling understanding creates empathy, which in turn increases customer engagement.

Stage 3: Foster Trust

Trust is a challenge for most people. It’s a dance of small steps that leads to gradually bigger steps. Empathy precedes trust because customers are not willing to trust you if you don’t understand and appreciate what matters to them. A key part of trust is transparency around expectations and honesty in whether and how you can meet them. This is where the “code of conduct” aspect of loyalty becomes explicit. For example, certain marriage vows call out commitment “in sickness and in health,” which means that you should not leave just because your partner’s health status changes. For brands, the need for transparency is equally important. For example, changing the rules of loyalty programs is a dangerous step, but can work if you are clear about it and give people multiple reminders about how the changes impact them. Employing a user-generated content social media strategy can help foster strong connections, but brands must clearly communicate the intended use of the content or they are at risk of turning off engaged customers and fans. In all cases, there are consequences for violations of the “code of conduct.”

On a bigger scale, transparency means being direct about what you do with the personal information of your community members and respecting the expectations around that trust. Your willingness as a brand to safeguard the data and uphold a “code of conduct” around sharing personal information is pivotal to establishing trust. If you see customer information as a source of revenue, then you’ve missed the steps around empathy and violated the code—unless they’ve given explicit permission for you to share it.

Stage 4: Make a Sacrifice

This is the pivot point in loyalty. Once you understand your customers, you’ve demonstrated that they can rely on you, that you respect what matters to them and that you add value to their lives, they will commit to your brand and sacrifice other alternatives because you make their lives easier, better, or more interesting. In human relationships, this signals a shift to excluding certain alternatives in accordance with the behavioral code of conduct that defines the relationship. For example, American marriages do not exclude other friendships, but they do impose restrictions on what you do with those friends (either physical or emotional).

Brands on the other hand, often forget that loyalty is not just about the perks, but also about sacrifices. Loyalty is a consumer’s decision to forgo alternatives and build a relationship with you. In return, what are you as a brand doing beyond the basic offerings to recognize and respect that loyalty? For Amazon, this means sacrificing shipping costs for Amazon Prime customers. For CVS, it means removing cigarettes, and an estimated $2B in associated annual revenues, from it's pharmacy stores to put the health of it's consumers first and remain true to it's promise of providing healthcare. Both brands have shown increases in customer retention and acquisition as a result.

Stage 5: Signal Affiliation

It’s one thing to make a commitment; it’s another to signal it publicly or overtly. When we mark ourselves or our possessions to show affiliation, we define ourselves within our social circles as aligned with certain others. Think about a monk’s clothing, a gang tattoo or a sports team uniform. All are public signals of belonging to a community, of a sacrifice willingly made and embraced. Brands have this same power. From the labels on my clothing to the model of car I drive, my purchase decisions signal my values, priorities and brand affiliations.

To encourage this behavior, brands can differentiate themselves in signaling their commitment to a person. Think about the way airlines give priority boarding or other perks to members of their loyalty programs. Guests of Old Chicago can earn social status, a coveted mug and show off their completion of the World Beer Tour by drinking 110 different beers in a year (only four per day count toward the tour!). Going beyond the base-level “code of conduct” expectations, these are overt statements that demonstrate your customers are special and you see them differently than others in the crowd. This approach fundamentally transforms the experience to make it unique and special, and in doing so, becomes less about the brand and more about what matters in their world.

Stage 6: Celebrate the Connection

Loyalty can be a lot of work, and challenging at times, so let's not forger to celebrate the ways in which we improve each other's lives. From the small moments to the big ones, loyalty is fed through joy as well as sacrifice. This is why humans celebrate birthdays and anniversaries. This is why humans celebrate birthdays and anniversaries, why we have harvest festivals (because harvest is hard work and collective sacrifice), why we hold graduation parties, wakes and “date nights.” Commitment can be difficult, especially when we as a species are hard-wired to seek out novelty.

Brands have approached this challenge in a variety of ways but powerful brands facilitate experiences that deepen the connections. Hard Rock Rewards Member Experiences hosts exclusive music-themed events like grand-opening parties, café openings or it's memorabilia tour exhibit to celebrate the relationship between customers, brands and music culture. Perhaps it’s a surprise and delight such as a move to a first-class seat on the airplane. Others extend to the typical celebrations in our lives, perhaps offering an extra discount in our birthday month. But it could just as easily be a public “hooray” and social enabled sharing on your fitness app when you reach a certain milestone in your training regimen. Or an unexpected status upgrade for your tenure with a brand versus your frequency of use (which is about the brand's metrics).

Part of what makes these “celebrations” so compelling is the surprise nature of the reward. When it’s a built-in reward (if I do X, I’ll get Y), it’s less motivating because it feels like part of the “code of conduct” agreement. When the reward is unexpected, it triggers the same glee as, for example, a surprise bouquet of flowers from a loved one. This only works, however, when the surprise is one that will be meaningful to the recipient.

And that brings us full-circle to stages 1 and 2: understanding what matters to me and why that insight allows you to select thoughtful gifts to celebrate our commitment. The stages of loyalty must work together and start anew to remain fresh and compelling. And all of it must start with real people, in their lives, with what motivates and inspires them. Brands that understand that loyalty is a sacrifice and not a gift have a greater chance of winning in this competitive game. Great loyalty starts with understanding the consumer, acknowledging the objectives of your brand’s loyalty efforts and identifying potential “brand sacrifices” and ends with marketers asking themselves “would it be enough to motivate me long-term?” If not, start again. In the absence of putting people first, you may get transactional preference, but you will never get real loyalty.

About the Author

Kate Sieck, Ph.D., Director of Research, holds a B.A. (University of Chicago), M.A. and Ph.D. (Emory University) in cultural anthropology with expertise in cognitive anthropology and research methods. Kate develops Olson’s methods and conducts academic and in-field research for client projects and internal initiatives. Her passion and innate curiosity for all brand communities make her an invaluable client partner. She consistently brings unique insights to all client initiatives and is instrumental in brand strategy work for Bauer, McDonald's, Baylor College of Medicine, Whole Foods Market, Kraft, Target and Saucony. Prior to joining Olson in May 2010, she spent nine years teaching in the anthropology departments at Stanford University and Emory University. Her research addressed the links between motivation and behavior, and her findings informed policies and practices affecting the relevant communities.